USD/EUR price trades from a range around 1.09 to the closing price on the previous trading day. Traders have had a lot of reasons for making euro price quotes over the last month to show over 1.10.
As the Fed has really had to push markets up as a result of recent historical data. Europe has also been dragged to an all time high as the underlying risk in the developed world really has picked up in June. Hence, it will be difficult for buyers to take advantage of what the market has available.
Euro trading has been in a state of flux, as recent European Central Bank actions have become so important to international investors. European Central Bank currency purchases have been a hot button issue for traders in the past week. As a result, traders have been forced to pull EUR/USD back out of a range of 1.10 to its closing price over the week.
In the past, there were discussions on FX dealers cutting EUR/USD based on the fear of extreme interest rate hikes from the US Federal Reserve. However, the EUR/USD fell slightly on this announcement that it will not buy any more bonds. In addition, EUR/USD was down because US Treasury yields are becoming very expensive for investors to purchase. The effect on EUR/USD is a slight hold.
As investors have been waiting for the Fed data, EUR/USD was down a bit because a meeting of the FOMC could not occur today, as the Federal Open Market Committee was still unable to issue meeting minutes on time. Also, Goldman Sachs announced that they expect a much smaller rate hike than at the end of May. This has led to some speculation that the US Federal Reserve will have a much more gradual rate increase rather than the November 25, 2020 releases.
At the same time, the ECB’s bond purchases will help to keep the euro/yen exchange rate elevated and potentially tilted. This is going to be good news for Europe. To me, it seems that the ECB is attempting to be helpful in Europe by allowing banks to buy government bonds with their money to make profits.
For the long run, investors may believe that interest rates will not rise over here. In other words, EUR/USD will not do much over the next few months and this is good news for EUR/USD. Further, EUR/USD might even trade back to the 1.06 level.
Additionally, the EUR/USD trading range seems to have changed into a EUR/JPY range. After the Federal Reserve meeting, we saw a surge of EUR/JPY in the afternoon session. From that point forward, EUR/JPY moves to a high that could be supported by a strong US economic data release.
Overall, EUR/USD price trades with EUR/CHF. It may remain relatively the same or move to the highs in the coming days, if the Fed does not follow through with any rate hikes.
Here is a final conclusion. It seems that a mini Fed meeting will occur, and a strong US data release should help to support EUR/USD. To me, this is good news.
Here is my final conclusion. We will see how the overnight market reacts to the Federal Open Market Committee meeting.
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